Wall Street wakes to net neutrality; Verizon tries to hit ‘snooze’

The financial services sector has recently been paying much more attention to …

We all know that corporate America is divided over the issue of network neutrality. In one corner are the Broadband Warriors (AT&T, Verizon, etc.), who don't want any restrictions placed on their ability to "innovate." In the other corner stand the Titans of Tech (Google, Microsoft, Yahoo, etc.) who don't want to find themselves paying a whole new set of fees just to ensure the level of service they already receive. But lost in all this talk of two camps is the fact that many non-technology businesses in the US rely on mission-critical network links—and many of these industries have not yet decided where they stand on the issue of 'Net neutrality.

One such industry, notable for its size and political clout, is the financial services sector, which last year spent US$117 billion on IT. The financial world is increasingly computerized, running everything from consumer-oriented online banking websites to sophisticated ATM networks, and they've recently awoken to the fact that network neutrality legislation will have a direct effect on their business.

Philip Corwin, a DC lawyer, has been circulating a memo on the topic to Wall Street executives over the last few weeks. In it, he calls the industry to action on behalf of network neutrality.

"If the industry does not engage quickly, it may find that the matter has been decided without its input and that the fallout will affect the industry's cost structure and customer relations for years to come," he wrote.

Financial industry groups have not committed to a position yet, saying only that they are studying the issue. With telecommunications bills working their way through both the House and the Senate, the industry may have less time for studying than they would like (though the November elections this year should delay passage of any major telecom legislations into next year). Broadband providers, not surprisingly, argue that worries over the issue are misplaced. Broadband operators certainly aren't "going to do anything stupid to antagonize the people they rely on for their money!" argues Peter Davidson, Verizon's chief lobbyist.

Davidson's words are part of a memo circulated to Verizon consultants, who are hitting the pavement to let Wall Street hear their side of the story. Though the memo says nothing particularly novel, it is interesting for the light it sheds on the way that Verizon and other technology companies try to sway public opinion. The Reuters article linked above contains four quotes from the memo, all of which are used verbatim (and without attribution) in a blog entry on the subject by Adam Thierer, who is the director of the Center for Digital Media Freedom at The Progress & Freedom Foundation, a free-market think tank.

Why would a think tank employee quote from an internal company memo as though the words were his own? When you look at the PFF's list of supporters, a possible answer emerges. Sponsors include Verizon, AT&T, BellSouth, Comcast, Qwest, and the National Cable & Telecommunications Association. Verizon executives have attended several PFF conferences, and Common Cause claims that the group wants only to "advance the bottom line interests of their corporate sponsors on a variety of telecom and media issues."

Whether that's true or not, this example nicely illustrates the web of relationships purchased by major industry groups in the hope of influencing public policy for their best interests. The goal is to make it look as though pressure on an issue is coming from many different directions (not just from the company's lobbyists), and the more "independent" a source appears, the better.

Update

Patrick Ross, PFF's VP for Communications and External Affairs, wrote in to say that—so far as he knows—Adam Thierer did not copy the quotes on his blog; Verizon's lobbyist copied Adam. Says Ross,

"Now a few days later I saw that Reuters piece quoting a Verizon memo. I have not seen the memo; I don?t know if Adam has, I?d walk down the hall and ask him but he?s out at the video game show. Anyhow, the memo came out after Adam?s blog. I don?t believe anyone at Verizon would knowingly plagiarize Adam (or anyone else), so I would guess that Adam was quoted in the Verizon memo, and the Reuters reporter quoted it without mentioning Adam."

Whatever the truth, the situation only highlights the tight relationship between the two groups, which is the point that was being made above. If Ross is correct, then Verizon officials read PFF's blogs, use snippets of them in internal memos, and also fund PFF. That's a cozy relationship, though not necessarily an illicit one.